International infrastructure group, Balfour Beatty, has announced that it has sold a 12.5% stake in Connect Plus.
The sale, reached after an agreement with the funds managed by Dalmore Capital Ltd (Dalmore), is a significant one because the value is well in excess of the initial valuation from the Directors of the company as of 30 June 2017.
Connect Plus is the company responsible for operating the M25 orbital motorway and is made up of a consortium including Balfour Beatty, Edge Orbital Holdings Ltd, and Egis Road Operation UK.
These organisations are responsible for managing, operating and maintaining 440 kilometres of motorway on the M25 and its key arterial link roads that serve central London and the surrounding area.
The sale is worth £103 million and subject to consent from Highways England, it will be completed by the year end.
Balfour Beatty intend to use the finance to pay down borrowings in 2018, and as a result of this transaction, expectations for profit before tax and year end net cash for the year are higher than those originally included in the company’s last trading update.
The Group has enjoyed a successful year which included healthy half-year results and after the disposal of this stake in Connect Plus, the profit of £53 million is £37 million higher than the market consensus of £16 million for Infrastructure Investment profit on disposal in 2017.
Year end net cash will be £103 million higher than the previous year.
Balfour Beatty’s Chief Executive, Leo Quinn, said this sale perfectly reflects how attractive the Group’s assets are to potential suitors.
He said: “This transaction emphasises the ongoing attractiveness of our infrastructure assets and is in line with our declared intent to maximise value for shareholders.”
The Group has also entered into arrangements with funds managed by Equitix Investment Management Ltd and Dalmore; this agreement means an extra 12.5% interest in Connect Plus can be sold by Balfour Beatty at an equivalent price.